After prolonged negotiations, an agreement has finally been reached to appoint economist Bishwa Paudel as the governor of Nepal Rastra Bank (NRB).
The understanding was finalized during the latest meeting between Prime Minister KP Sharma Oli and Nepali Congress President Sher Bahadur Deuba.
Following this, Paudel resigned from his position as a member of the governor recommendation committee. He submitted his resignation via email to Finance Minister Bishnu Paudel on Monday.
The appointment of NRB governor had been stuck in political wrangling between the two ruling parties, with multiple names being floated and rejected before Paudel’s name was agreed upon.
However, it is still not certain when he will be appointed. If the two top leaders change their minds, Paudel’s name could still be dropped.
According to law, a new governor must be appointed at least one month before the incumbent governor’s retirement. Past governments have also repeatedly violated this provision.
This time, however, the long-drawn-out governor appointment process has exposed the inefficiency of the strong NC-UML coalition government.
Initially, the two parties were locked in a dispute over who should get to pick the governor.
PM Oli insisted that since the UML held the Ministry of Finance, its recommended candidate should be appointed governor.
However, after candidates picked by PM Oli were appointed managing director of the Nepal Electricity Authority (NEA) and chairman of the Securities Board of Nepal (SEBON), NC demanded that it should get to choose the governor.
Even though NC held the Ministry of Energy, PM Oli’s preferred candidate, Hitendra Dev Shakya, was appointed as the NEA’s managing director. This put the NC in a strong position to claim the governor’s post.
NC leaders, including current and former office-bearers, pressured party President Deuba to not relent on the governor’s post, alleging that PM Oli was trying to monopolize key appointments. Deuba then firmly staked claim to the governor’s post in discussions with Oli.
Initially, only Oli and Deuba held discussions on the appointment of governor, with other leaders of both parties kept in the dark. Later, Deuba gradually began sharing details of their discussions with his party’s office-bearers and revealed Oli’s reluctance.
The prime minister set deadlines for the governor’s appointment after holding repeated discussions at Baluwatar, but no appointment was made.
PM Oli and Deuba then expanded the discussions, including other leaders from both parties.
During a meeting held at Baluwatar on April 16, PM Oli agreed to appoint NC’s preferred candidate as the governor. Deuba then proposed Gunakar Bhatta, an executive director at NRB, as the NC’s choice for the post. The prime minister also agreed.
Deuba told Bhatta that PM Oli was positive about appointing him. But questions were raised within the UML as to how an executive director could be appointed as the governor. Meanwhile, Bhatta resigned from his position as executive director on April 18. But the UML was opposed to his appointment as governor.
The NC was informed that Bhatta’s resignation had yet to be approved. Bhatta had submitted his resignation to Acting Governor Neelam Dhungana. She has not approved his resignation yet, for which she continues to face criticism.
In the NC, some argued that the government should create an environment for approving Bhatta’s resignation even if Finance Minister Paudel had to remove Dhungana as acting governor. Some argued that Dhungana had not accepted Bhatta’s resignation due to the UML’s opposition.
Dhungana is from PM Oli’s home district and election constituency. She was appointed deputy governor with his blessing. This also strengthened the argument that the UML did not want Bhatta to be appointed governor, but the NC’s desire to remove Dhungana as acting governor did not materialize.
Recently, PM Oli himself said that Bhatta could not be appointed as governor and asked the NC to propose another name. He also cited a precedent from 2004, when the then prime minister Deuba had not appointed Yubaraj Khatiwada (then NRB’s executive director) as governor. Khatiwada was the head of NRB’s Economic Research Department as executive director at the time, just as Bhatta is now.
When Deuba was prime minister and Bharat Mohan Adhikari was finance minister in 2004, both the NC and UML had staked claims to the governor’s post.
The UML claimed that it should get to pick the governor as it headed the Ministry of Finance. The party proposed Khatiwada, then NRB executive director, for the post.
The governor recommendation committee recommended economist Parthiveshwar Timilsina, the then deputy governor Bijay Nath Bhattarai, and executive director Khatiwada.
PM Deuba sought the attorney general’s opinion on whether an NRB executive director could be appointed as the governor. Mahadev Prasad Yadav was the attorney general at the time. The Office of the Attorney General said that an executive director could not be made governor.
Deuba then appointed Bhattarai as the governor, blocking Khatiwada.
According to a former executive director of NRB, Khatiwada had also resigned to become governor at the time. But the official could not say with certainty whether Khatiwada had resigned before or after the dispute arose. Khatiwada could be not contacted for comment.
A similar incident occurred this time too.
After the dispute protracted, PM Oli told Deuba that NRB Executive Director Bhatta could not be made governor, citing a precedent from the time when Deuba was prime minister.
Khatiwada, who was then an executive director at NRB, is PM Oli’s economic development advisor. He served as finance minister during Oli’s previous term.
When PM Oli reminded Deuba of the 2004 incident, Deuba had no choice but to drop Bhatta’s name. He then proposed economist Paudel as the new candidate for the governor’s role.
During a meeting held at Baluwatar on Saturday, Deuba told PM Oli that Paudel would be suitable for the governor’s job if Bhatta could not be appointed. PM Oli also readily agreed to it.
Paudel then resigned as a member of the governor recommendation committee.
The committee, headed by Finance Minister Bishnu Paudel, will now have to appoint a new member. The governor appointment process will move forward only after the committee gets full shape.
Bishwa Paudel was the NC candidate from the Chitwan-1 constituency in the election for the House of Representatives in November 2022. He lost the election.
Paudel had wanted to win the next election and take up an executive role such as minister, which is why he initially was not interested in the governor’s post. But NC President Deuba has now proposed him to head the central bank.
Paudel has a PhD in economics from the United States. He previously served as economic advisor at the Ministry of Finance, vice-chairman of the Planning Commission, and economic advisor at the International Labor Organization.
Paudel was also a professor at Kathmandu University’s School of Management. He had distanced himself from the NC’s active politics after becoming professor at the university.
